The White House on Monday called for a new, stronger regulator for government-sponsored housing enterprises, saying a problem at one of the giant mortgage funders could spread throughout the financial system. The Bush administration, in an analysis of the U.S. economy that accompanied its budget proposal, questioned the value of Fannie Mae, Freddie Mac and the Federal Home Loan Bank system, given the risks their operations pose.

Perceived U.S. government backing for Fannie Mae and Freddie Mac is worth billions to shareholders but does little to lower mortgage rates for home buyers, Federal Reserve studies said Thursday. The suggestion that the government-sponsored enterprises fall short in their primary task of promoting homeownership comes as Congress considers toughening oversight after accounting scandals at Fannie Mae and Freddie Mac.

Federal regulators allowed mortgage finance giants Fannie Mae and Freddie Mac to buy larger individual mortgages next year after a jump in home prices, a move that would lower borrowing costs for buyers of more expensive homes. The cap on a mortgage the two government-sponsored enterprises can buy climbed to $359,650 from $333,700 after a report that the average U.S. single-family home price surged in October by 8.5% to $264,540 from $243,756 in the same month a year ago.

Congress urged the Bush administration to replace the director and deputy director of the regulator for Fannie Mae and Freddie Mac, the largest sources of money for U.S. home mortgages. The Senate and House on Saturday, as part of a $388-billion spending bill, called for the ouster of Armando Falcon and Stephen Blumenthal from the Office of Federal Housing Enterprise Oversight.

Freddie Mac, the second-biggest provider of financing for U.S. residential mortgages, said Monday that it would resume quarterly reports of its earnings for the second quarter of 2005 after more than a two-year hiatus. Freddie Mac has made a series of changes to management and accounting policies since it said last year that it had manipulated earnings from 2000 to 2002 to reduce their volatility.

Mortgage giant Freddie Mac said Monday that it was shutting down some operations of its debt-securities sales division and transferring others -- moves that experts said should tighten the McLean, Va.-based company's internal controls after an accounting scandal. The division, known as the securities sales and trading group, was responsible for some of the accounting irregularities that the government-sponsored company was cited for last year. Freddie Mac restated $4.

The U.S. government agency that regulates mortgage finance company Freddie Mac cannot freeze more than $50 million in compensation owed to the company's former chief executive who stepped down last year amid an accounting scandal, a judge ruled late Monday. The Office of Federal Housing Enterprise Oversight made the company withhold payment to Leland Brendsel and other executives last year after accounting problems at the company came to light. But U.S.

Freddie Mac, the No. 2 U.S. mortgage finance company, said Wednesday that it might face civil action from the Securities and Exchange Commission for possible violations of securities laws. The company said it had received a "Wells notice" indicating that SEC staff is considering recommending action against it to the full commission that may include a permanent injunction and monetary penalties.

Fannie Mae and Freddie Mac are being maligned by the Bush administration in an effort to tighten regulation of the two largest U.S. mortgage-finance companies, 76 Democrats in the House of Representatives said in a letter to the president. The White House "has turned to attacking" the companies in public statements to "foster negative opinions in the financial markets" and raise their "cost of borrowing," said the lawmakers, including Democratic leader Nancy Pelosi (D-San Francisco).

Freddie Mac will replace half its board by 2005 and offer new pay incentives to executives in a plan aimed at making expanded homeownership its top goal, Chief Executive Richard Syron said Thursday. The mortgage finance company has lost "sight of our fundamental objective of increasing homeownership," Syron said in a speech at the University of Texas in Austin. Freddie Mac, whose accounting is being investigated by its federal regulator, has 13 directors.